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Saturday, July 24, 2010

As Naomi (or her assistant) stares at her wardrobe and wonders what is appropriate court-ware for a Dutch summer, the world turns its fickle eye on the ultimate artificial luxury good: diamonds. The big story right now is, of course, Zimbabwe.

Its interesting to compare and contrast two recent articles in The Guardian on Zimbabwe's Marange diamond fields, by Petina Gappah and by David Smith. Gappah's piece is tinged with cautious optimism, as when she writes,

"As Zimbabwe saw with land reform, ordinary people may eventually benefit from national resources, but only after the lion's share has gone to politicians. The crucial issue around Zimbabwe's diamond wealth is how to ensure it benefits the whole country and not just a few, because if managed well it has the potential to transform the country."

There is no such hope from Smith's report, as he concludes,

"Yet again, it appears that Africa's vast mineral wealth is enriching everyone but Africans, who suffer in inverse proportion."

The Kimberly Process Certification Scheme (KPCS) has allowed an initial sale of Marange diamonds to go ahead. However, if there is wrongdoing through this, Zimbabwe diamonds will be banned from the international market. It would then be difficult for illegal Zim diamonds to be then dumped on the world market as Gappah suggests. No Kimberly certification would significantly impede tradability. The current trade route through Mozambique would essentially be closed down through market forces, as demand in Belgium, Dubai and elsewhere nosedives for what would have become illegal diamonds. The KPCS and the World Diamond Council would not risk their credibility by ensuring the channel of uncertified goods (or fake certification) remained open for long.

The choice between Gappah and Smith is the same as the historical difference diamonds have made between Botswana and Sierra Leone. But then, Gaborone didn't have a cornered animal like Zanu PF...